from the nobody-believes-the-words-coming-out-of-your-mouth dept

Given the fact that the FCC has recently bumped the standard definition of broadband to 25 Mbps to highlight competition gaps; reclassified ISPs as common carriers; passed real net neutrality rules for the first time ever; taken aim at the industry's use of protectionist state law to keep the duopoly intact; pushed for improved broadband privacy rules, and is now taking aim at the cable industry's monopoly over cable set top hardware, it's not really surprising that the cable industry isn't happy right now.

One could argue (especially if you've studied regulations across the pond) that this is just what it looks like when a telecom regulator is doing its job after falling asleep for arguably fifteen years. But former FCC boss turned top cable lobbyist Michael Powell sees things differently. Powell took the opportunity at the cable industry's annual INTX trade show in Boston to throw a bit of a hissy fit, complaining repeatedly that the industry was under "relentless" and unprovoked "regulatory assault":

"We find ourselves the target of a relentless regulatory assault,” Powell told attendees. “The policy blows we are weathering are not modest regulatory corrections. They have been thundering, tectonic shifts that have crumbled decades of settled law and policy."...What has been so distressing is that much of this regulatory ordinance has been launched without provocation," said the NCTA head. "We increasingly are saddled with heavy rules without any compelling evidence of harm to consumers or competitors."

Who says telecom lobbyists can't be comedic geniuses? Of course the cable industry enjoys some of the worst customer satisfaction ratings of any industry in America thanks to generations of regulatory capture and little real competition in broadband. After a generation of treating captive consumers poorly there's really not a more hated sector than cable, and the industry's reputation is only getting worse as it rushes to take advantage of limited competition and impose usage caps. As a result, complaints to the FCC have been skyrocketing.

"Compelling harm" should be apparent to everyone just by looking at their cable and broadband bill, and every time they call Comcast customer support.

And despite a lot of cable sector chirping about "innovation," as AT&T and Verizon back away from unwanted DSL markets, cable broadband's monopoly is only growing in the face of less competition, meaning less incentive than ever to compete on price or improve customer service across huge swaths of territory.

And you really can't find a man more responsible for keeping this status quo intact than Powell, who ran the FCC from 2001 to 2005. Powell was a vibrant example of sector dysfunction and revolving door regulators; completely incapable of even admitting the TV or broadband sectors had or has problems. His tenure was just one chapter of a more-than-fifteen-year, bipartisan stretch during which the FCC was little more than a lapdog to the sector it was supposed to be policing. As such, cable enjoyed decades of almost total local, state and federal regulatory capture, all while crowing about the immense benefits of "free markets."

The result of this aggressive dysfunction forged the cable industry we all know and love today.

Powell is best remembered for his decision to try and push broadband over powerline as a major third avenue of sector competition, thereby justifying regulatory inaction on other fronts. But Powell intentionally ignored something everybody in telecom had known for years: the technology would never actually work due to the massive radio interference it caused. But by braying about broadband over powerline being the "great broadband hope," Powell managed to deflect criticism that he was busy actually making the sector substantially worse through total inaction and ineptitude. Other FCC bosses like Kevin Martin and Julius Genachowski carried on that proud tradition.

Fast forward a decade and Powell's now lobbying for the very companies he once "regulated," complaining about unfair persecution of an industry that has been begging for a kick in the teeth for the better part of most of our adult lives. And while there are certainly plenty of sectors that deserve a hands-off regulatory approach to protect fledgling organic market evolution, the cable sector is a unique, braying beast built on the back of apathy, revolving door regulation, and an utter disdain for the captive consumers the sector serves. As such, Powell won't find too many people crying themselves to sleep just because the FCC finally decided to do something about it.

from the insult-to-injury dept

The FCC recently voted 4-1 to approve Charter's $79 billion acquisition of Time Warner Cable and Bright House Networks. The agency just released its full order (pdf) pertaining to the deal, outlining the various conditions the FCC hopes to enforce to keep Charter from simply becoming another Comcast. Among them are a seven-year ban on usage caps, a seven-year ban on charging for direct interconnection (the heart of the telecom industry's battle with Netflix last year), and a ban on any attempt to pressure broadcasters into refusing deals with streaming video providers.

But the FCC says the merger conditions also require Charter to deploy broadband service to an additional 2 million locations, one million of which need to already be served by another competing provider. The faint threat of competition was enough to upset the American Cable Association (ACA), the lobbying organization for smaller cable providers. According to ACA CEO Matthew Polka, the added competition will actually be a horrible thing for consumers, because, uh, well, just because:

"The requirement on Charter to overbuild competitors will harm consumers in two ways...First, it will harm Charter's customers by preventing Charter from investing its resources most efficiently, such as by upgrading its networks to higher speeds. Second, it will harm customers of local, small providers when these customers are satisfied with their existing service."

And here you were thinking competition was a good thing. Of course, if these smaller cable operators don't want Charter coming to town and taking their milk money, they could simply offer cheaper, faster service themselves. Granted that's a totally foreign concept in the cable industry, where large and small cable operators alike have grown comfortable with not only local regulatory capture, but a lack of competition in the broadband space entirely.

Any disruption of this paradigm, no matter how minor, results in all manner of histrionics -- and a quick onset of amnesia regarding the fact that nobody likes cable companies after a generation of poor service and apathy, and therefore will never, ever feel bad for them.

If history is any indication the ACA really doesn't need to worry all that much. Traditionally in telecom, FCC conditions requiring that an ISP "expand to X number of additional homes" are usually conditions that the merging companies volunteer themselves. Why? It's most frequently because that expansion either already happened (and the paperwork hasn't been filed yet) -- or was slated to happen as a matter of course. Or it may not happen at all; such expansion promises are usually never really independently audited by the FCC, which lets companies string the FCC along with an endless flood of expansion promises that more often than not aren't even real.

In other words, the ACA's decision to insult the intelligence of an already annoyed customer base by pretending competition would be bad for them -- only adds insult to injury. Instead of whining about competition, how about just competing? Better yet, how about competing with Charter using a strange, outdated idea known as better customer service?

from the you-see,-we-don't-really-do-competition dept

Back in February the FCC voted on a new plan to open up the traditional cable box to competition. According to a fact sheet being circulated by the agency (pdf), under the FCC's plan you'd still pay your cable company for the exact same content, cable operators would simply have to design systems -- using standards and copy protection of their choice -- that delivered this content to third-party hardware. The FCC's goal is cheaper, better hardware and a shift away from the insular gatekeeper model the cable box has long protected.

Given this would obliterate a $21 billion captive market in set top box rental fees -- and likely direct consumers to more third-party streaming services -- the cable industry has been engaged in an utterly adorable new hissy fit. This breathless hysteria has primarily come in the form of an endless stream of editorials -- most of which fail utterly to disclose financial ties to cable -- claiming that the FCC's plan will boost piracy, hurt privacy, "steal the future," and even harm ethnic diversity.

And now, the industry is also threatening a lawsuit. As the industry argued with Title II, net neutrality, and everything else, former FCC boss turned top cable lobbyist Michael Powell is arguing that the FCC has once again overstepped its regulatory authority:

"An agency of limited jurisdiction has to act properly within that jurisdiction," Powell said, making it abundantly clear the NCTA does not believe the FCC has not done so in this case. He said that the statute empowers the FCC to create competition in navigation devices, not new services. "Every problem does not empower an FCC-directed solution. The agency is not an agency with unbridled plenary power to roam around markets and decide to go fix inconveniences everywhere they find them irrespective of the bounds of their authority.

Except unlike net neutrality, telecom policy wonks like Public Knowledge's Harold Feld (who probably spends more time wading through FCC policy and legal issues than anybody on earth) notes there's absolutely no doubt the FCC has the authority to act here:

"First, it’s important to recognize that the cable folks were already in front of the D.C. Circuit three times on this issue, and lost each time. See General Instrument Corp. v. FCC, 213 F.3d 724 (D.C. Cir. 2000); Charter Communications Corp. v. FCC, 461 F.3d 31 (D.C. Cir. 2006); and Comcast Corp. v. FCC. In each of these cases, the cable industry made similar statutory arguments about the limits of FCC authority in Section 629. On each occasion, the D.C. Cir. — which was a lot more pro-business and anti-FCC back then, rejected them.

So if the cable industry's lawsuit goes nowhere, its only other hope is that it can convince the public via editorials, sockpuppetry and astroturfing that the FCC's plan isn't actually about helping consumers, it's just a power-crazed attempt by "big tech" (read: Google, Amazon) to treat poor, under-appreciated cable companies unfairly. The problem with this effort, as usual, is that the cable industry remains the least liked industry in America thanks to a generation of anti-competitive behavior. Therefore the only folks likely to buy the cable industry's argument here are those with a political axe to grind (conflating government over-reach in other areas with the FCC's attempts to fix a broken telecom market), or those that tend to profit from said broken telecom and TV market.

If there's any question at all about the FCC's effort, it's whether or not the agency would find its time better spent focusing its regulatory calories on shoring up broadband competition, since the rise of Internet video is inevitably destined (even though it may take another decade) to put the lame old cable box out to pasture without government intervention.

from the giving-you-a-little-more-rope dept

After taking a PR beating for several years on the matter, Comcast has announced that it's significantly bumping the company's usage caps. Since 2013 Comcast has been conducting a "trial" in many of the company's less competitive markets, capping usage at 300 GB per month, then charging users either $10 per each additional 50 gigabytes, or providing users the option of paying $30 to $35 per month extra to avoid the cap entirely. But according to a new blog post by the cable giant, the company will be bumping that usage allotment to one terabyte per month starting June 1.

Users will still need to pay $10 per each additional 50 gigabytes of data consumed should they go over the cap. And they still have the option of paying a penalty should they want to avoid usage caps entirely, though Comcast has bumped the price of such an option to an additional $50 per month. Comcast's quick to insist that the terabyte cap is so generous, few consumers will ever find themselves running into the limit:

"A terabyte is an enormous amount of data. It’s far more than most of our customers will ever use in a month. Today, more than 99 percent of our customers do not come close to using a terabyte. Our typical customer uses only about 60 gigabytes of data in a month – that’s far less than a terabyte (in fact, 940 gigabytes less), or less than six percent of a terabyte."

Of course, while that's true today, that doesn't mean it will be true tomorrow. And while the increase is certainly welcome, that doesn't change the fact that usage caps on fixed-line networks still aren't necessary. As we've repeatedly noted, Comcast's cost to provide broadband service remain fixed or in decline, and the company's own support documents and engineers have suggested the caps have nothing to do with congestion or network necessity. That's because they have everything to do with protecting TV revenues from Internet video competitors.

While Comcast's announcement implies Comcast is graciously responding to consumer feedback, the origins of the company's decision lie elsewhere.

With the FCC imposing a seven year ban on usage caps as a Charter merger condition this week, many believe the FCC is signaling it intends to finally crack down on usage caps. The agency has tap-danced around the issue for years, but with a growing number of companies exploring the option -- and a growing number of companies (including Comcast and Verizon) exempting their own content from such caps, pressure has mounted steadily on the FCC to wake up from its regulatory coma on the subject. If that's to happen, it will likely happen after the industry's lawsuit against the agency over net neutrality is settled.

Comcast's also responding to the fact that AT&T is planning to impose its own usage caps starting May 23. AT&T plans to begin imposing usage caps ranging from 300 GB to 1 terabyte, and, like Comcast, charge $10 per each additional 50 GB consumed. Also, like Comcast, AT&T intends to begin charging customers a $30 premium should they want to avoid the charges, effectively charging customers significantly more money for the same service they had yesterday. Comcast bumping its cap to more closely match AT&T's is the U.S. broadband market's rather twisted version of competition.

It seems likely that some news outlets will frame what Comcast's doing as "generous." And while a definite improvement, it shouldn't overshadow the fact that these caps are little more than glorified price hikes on uncompetitive broadband markets, and an anti-competitive weapon against the threat of Internet video disruption.

from the rooting-against-your-best-self-interests dept

As we've been discussing, the FCC is cooking up a plan to open up the closed cable set top box to third party competition. As we've also been pointing out, the cable industry has been throwing an absolutely epic hissy fit about this plan, given it would destroy the $21 billion in annual revenues cable operators make off of cable box rental fees. Since it can't just admit this is all about protecting set top rental fees, the cable industry has been pushing an endless wave of editorials in newspapers and websites nationwide, claiming more set top box competition will hurt consumer privacy, increase piracy, harm diversity, and rip the very planet from its orbital axis.

Most of these editorials are being penned by the usual assortment of entertainment industry and telecom hand-wringers, the majority of whom have a vested financial interest in the status quo and as such have been happy to repeat the talking point that the FCC's well-intentioned plan is just a secret plan by "big Tech" (aka Google) to treat the noble and ultra-innovative cable industry unfairly.

Back in March we noted that despite the fact that such rules would obviously help streaming set top vendors, Roku had come out in defense of the cable industry, rather timidly saying it wouldn't be supporting the FCC's plan because it has been trying to secure new, semi-exclusive deals with cable providers:

"We have not been advocating for a rule making in this area at this time,” Tricia Mifsud, a Roku spokeswoman, told IBD. “While we are known for selling streaming players, it is only one area of our business. Customers also access our platform through smart TVs and streaming players that operators deploy."

Roku's opposition to the FCC's plan became a little clearer last week, when Comcast (trying to preempt the FCC's plan), announced it was launching an initiative to let some Comcast customers access cable content via Comcast apps on third party devices. Comcast's partners in this new initiative? Samsung and Roku, who'll be offering the Comcast Xfinity app on smart TVs and streaming devices. And while Comcast's plan is certainly a step in the right direction, Comcast being Comcast you can be fairly certain that there will be caveats when the program launches to ensure the impact to set top box revenue is minimized. Comcast's plan obviously also doesn't impact other pay TV operators, so it doesn't really change things for the overall industry.

Trying to defend the company's self-immolating position, Roku CEO Anothony Wood decided last week to write an editorial over at the Wall Street Journal, breathlessly insisting the FCC's plan would hurt consumers. And, as with every editorial of this type, Google is trotted out as the bogeyman pulling the FCC's strings in a plan to somehow treat cable companies unfairly:

"...With prodding from Google and TiVo, the FCC is proposing new “set-top-box” rules that would force cable companies to make their video services available as an “open” set of streams. In other words, companies like Comcast or DirecTV would be required to provide their video, guide data and encryption for use by other companies who could then create their own hardware and software to deliver cable content. As Google argued in an FCC filing last year, the intent is to “unleash competition in the retail navigation-device market” and drive down costs.

This might seem like a great deal for consumers and companies like mine, but once you start peeling back the layers, the picture changes. The proposed regulation would—as we say in the industry—“decouple the user interface” from the video and data itself. This would allow a company like Google to do to the TV what it did on the Web—build an interface without the “inconvenience” of licensing content or entering into business agreements with content companies such as ABC, FOX, HBO, or video distributors like pay TV operators. The unintended consequences of circumventing these kinds of arrangements are likely to include increased costs for consumers, reduced choices and less innovation."

But if you actually read the FCC's proposal so far (pdf), you'll notice the plan does nothing of the sort. In short, customers will still have to pay their cable provider to access cable content, it will just be delivered to additional hardware platforms -- using copyright protection standards determined by the cable industry. The content can't just be repackaged without cable companies getting compensation. How letting consumers have access to more, better and cheaper methods to access the same content results in "reduced choice and less innovation" is a logical leap that makes no coherent sense whatsoever. Similarly, this repeated claim that this is some secret cabal by Google -- when the quest for clunky cable set top box reform is decades old -- remains a bizarre narrative unsupported by reason. Would Google benefit from open set top boxes? Yes. So would countless other hardware vendors and developers.

Woods also tries to argue that regulation isn't necessary, because we're already seeing innovation in the streaming set top box market:

"Regulating the set-top box is unnecessary in the modern age of Internet streaming. Consumers now have tremendous choice for their TV operating system and interface. Robust competition among companies like Roku, Apple, Amazon and Google is already driving rapid innovation and pushing costs down.

Right, but we're not talking about streaming players and services, we're talking about the traditional cable set top box. You know, the cable boxes that consumers, on average, pay $231 to rent annually (and thousands of dollars for over the life of the hardware) despite most boxes being worth a fraction of that? And while we have seen some innovation in recent years on the set top box front (voice search, marginally less archaic GUIs), by and large the cable box remains a clunky relic of a bygone era and a cornerstone of the cable industry's antiquated and uncompetitive walled garden approach to customer services.

The thing is that if anybody should know better, it's Roku. The company had to file a complaint with the FCC (pdf) after Comcast spent years refusing to let its customers access HBO Go on Roku devices (in order, of course, to push those users toward Comcast's own Xfinity set top boxes and apps). Roku also expressed concerns in net neutrality filings with the FCC that Comcast was using TV Anywhere authentication as yet another way to inhibit Internet video competitors; Roku included:

"A large and powerful MVPD may use this leverage in negotiations with content providers or operators of streaming platforms, ultimately favoring parties that can either afford to pay for the privilege of authentication, or have other business leverage that can be used as a counterweight to discriminatory authentication. Additionally, MVPDs with affiliated ISPs can abuse their power over authentication by choosing to authenticate only their own or affiliated offerings."

Yet here we are, with Roku's CEO now playing kissy face with that same company because they've struck a new deal that will give Roku its own, special advantage in the pay TV market.

It should be noted that Woods wasn't entirely willing to pledge unwavering fealty to Comcast. Nor is his editorial entirely devoid of good points. Though Woods isn't willing to mention his new BFF by name, he does make some vague references to Comcast's decision to give its own content an unfair advantage via usage caps and zero rating:

"...the FCC proposal is distracting from the leading risk to the continued evolution of TV—open and fair broadband Internet access for all consumers. In particular, cable companies often control their customers’ broadband access and can take measures against competing streaming services and devices to give their own streaming services and devices an advantage. FCC regulations banning the discriminatory use of data caps and “zero-rating” schemes that selectively exempt certain content from data limits are far more important to the future of TV than “opening” the cable box.

If broadband Internet services are accessible and affordable to consumers and there is a level playing field for content providers and devices makers, then consumers will benefit from a revolutionized television experience. Let’s not bog down the revolution with an unnecessary government intervention in a dynamic marketplace.

In other words, while Woods is perfectly happy to blow a few kisses to protect his new business relationship with the Philadelphia-based cable giant, he's not willing to entirely sell himself and his company down river by ignoring the problems Comcast is causing on the net neutrality and zero rating fronts. And this is actually the one area I don't disagree with Woods on. With Internet video disrupting traditional cable anyway, it might make more sense for the FCC to focus its efforts on improving broadband competition. And, more specifically, the telecom industry's use of usage caps and zero rating to protect legacy TV from Internet video.

By the FCC's logic however, the glacial pace of cord cutting means that traditional cable and ye olde cable box will still be a dominant force for much of the next decade -- and consumers could still benefit from increased cable set top box competition during that period. The problem is that the cable industry clearly intends to fight this proposal tooth and nail, by dragging the FCC's effort out via lawsuit, and funding a major PR offensive in the hopes of convincing the public the FCC's gone power mad. With so many efforts on its plate (from municipal broadband to new broadband privacy rules), the FCC may have to seriously consider just which battles are truly worth fighting, and which problems, like the cable box, may be resolved organically by the market.

All of that said, it remains more than a little embarrassing that Woods and Roku are so eager to sell their longer-term success -- and the overall viability of the broader streaming industry -- downriver just to snuggle up a little closer to one of the most anti-competitive companies in the television industry.

from the much-more-of-the-same dept

Last month we noted how Canadian regulator the CRTC tried to do something about the high cost of TV service by forcing Canadian cable operators to provide cheaper, more flexible TV bundles. Under the new CRTC rules, companies had to provide a $25 so-called "skinny bundle" of discounted TV channels starting March 1, and the option to buy channels a la carte starting December 1.

The Canadian TV industry responded, but not in the way government (should have) expected. Some companies responded by pouting and refusing to show regulators faces on TV. Some cable operators tried to hide the options from consumers. Others offered so-called "skinny bundles," but saddled them with so many below the line fees as to make the product offerings lack any real value. Some cable operators even agreed to adhere to the December 1 a la carte requirement a little early by offering consumers individual channels for sale -- but pricing them at $18 each.

In other words the CRTC's attempt to lower industry prices isn't really working, in part because the CRTC (much like the FCC in the states) refuses to crack down on misleading, below the line fees and false advertising. In a bit of an odd interview with the Globe and Mail, CRTC boss Jean-Pierre Blais now seems to claim that the CRTC's efforts can't be a bust, because the goal was never to lower TV prices:

"People may have thought, mistakenly, that the CRTC was going to reduce everybody’s cable bills – that’s not what we promised. We said we’re going to give you more choice,” Jean-Pierre Blais, chairman of the Canadian Radio-television and Telecommunications Commission, said in an interview."

Right, but the reality is that the CRTC's plan (so far) has fostered neither choice nor lower prices, it has simply fostered the illusion of choice. Users may now be able to get a $25 discounted bundle of TV channels, but once you add on set top rental fees, DVR fees, home gateway rental fees, HD fees, "digital service fees," fees for additional channel packs you actually want to watch, and the cost of mandatory broadband -- you're not really seeing much if any significant improvement. The CRTC's effort might work, but it would require cracking down on misleading pricing, which no telecom regulator in North America seems all that keen on.

Oddly, Blais then proceeds to effectively imply consumers (which are calling in at volume to complain about the misleading offers) are to blame for not working hard enough to secure a good deal:

"He said the commission’s aim has been to give consumers “tools to solve their own problems,” and used a personal anecdote to drive home his point. “I myself … looked at my offerings and slimmed it down,” Mr. Blais said, after giving a speech about anti-spam legislation in Toronto on Tuesday. “Was it easy? No. … You have to keep going up the chain into [the] loyalty program. It requires effort...This will take time and I’ll repeat it again: Canadians will have to do some work,” Mr. Blais said. “They will have to be ready to at least threaten to change providers."

Again though, the end result, even with a lot of consumer work, really is more of the same. Users now get to enjoy the illusion of choice and value, instead of actual choice and value. Which leaves one again wondering if instead of trying to regulate cable prices (and even cable boxes as we're trying here in the States) it would make more sense to just let the legacy pay TV system collapse under the weight of its own hubris and Internet video competition, then focus the full power of regulatory attention on doing everything possible to promote broadband competition, the real regulatory battlefield of the 21st century.

from the beneath-the-hype dept

Despite government programs, national broadband plans, billions in subsidies and a lot of recent hype paid to gigabit services like Google Fiber, U.S. broadband is actually getting less competitive than ever before across a huge swath of the country. Companies like AT&T and Verizon have been backing away from unwanted DSL networks they simply don't want to upgrade. In some cases this involves selling these assets to smaller telcos (who take on so much debt they can't upgrade them either), but in many markets this involves actively trying to drive customers away via either rate hikes or outright neglect.

As an end result, the nation's biggest cable companies are enjoying a larger monopoly in many markets than ever before as they hoover up those fleeing customers. According to the latest postmortem of 2015 subscriber totals, the seventeen largest broadband providers acquired 3.1 million broadband subscribers last year. But if you look at the numbers more closely, you'll notice that nearly all of them were acquired by the cable industry:

In fact, cable added 97% of the 6.1 million subscribers added in the last two years. Phone companies, meanwhile, lost about 185,000 subscribers last year -- the first time in the history of broadband that they saw a net loss. Again, that's because many of these companies either no longer want to be in the fixed-line broadband business because they're focusing on wireless (AT&T, Verizon) or they're growing just for growth's sake (Frontier, CenturyLink), acquiring neglected AT&T and Verizon assets, but saddling themselves with so much debt in the process they can't afford necessary upgrades.

That's great news for cable. Less fixed-line competition means they can charge higher prices, yet have less incentive to improve what's arguably already the worst customer service in the history of industry. More importantly, the cable industry can begin experimenting with usage caps and metered billing without the pesky threat of a customer being able to leave. Of course, if you ask cable providers, they'll be quick to assert they face greater competition than ever before -- but the reality is in many markets they either face no real competition or a sagging telco trying to push 3 Mbps DSL as the pinnacle of innovation.

And indeed, recent FCC data suggests that two-thirds of homes currently only have the choice of one ISP (cable) that's capable of providing speeds that even meet the new standard FCC broadband definition of 25 Mbps. ISPs and loyal Congressional allies have been whining about this higher standard precisely because it only highlights the markets slow transition to cable broadband monopoly.

That's not to downplay the impact of efforts like Google Fiber, which are going a long way to spur competition in select markets. But Google Fiber is really only focusing on a dozen or so profitable markets, and in some ways our gigabit obsession has overshadowed the fact that the majority of towns and cities are facing a stronger cable broadband monopoly (and therefore higher prices for the kinds of speeds people actually use) than ever before. That's something Tucows/Ting executive Elliot Noss touched on briefly in an interesting bit over at Medium talking about the company's own piecemeal broadband improvement efforts.

It's understandable that any given week the media would prefer to talk about the feel-good aspects of the gigabit economy, but the reality is that, thanks to telco apathy, Congressional incompetence and cable consolidation, we've quietly built a bigger, bolder cable broadband monopoly. The solution? Either waiting for wireless to mature as a fixed-line alternative (which, given current LTE usage caps and prices, could be quite a wait), or eliminating the state-level barriers erected by local duopolists, designed to prevent grass root efforts to kick-start something vaguely resembling real broadband competition.

from the i-got-mine,-thanks dept

As the FCC continues its push to open up the cable set top box market to competition, one of the companies that could benefit the most from such a shift isn't willing to support the initiative. The FCC's plan calls for the cable industry to deliver its existing cable content to third-party hardware, creating a new competitive market and putting an end to the $20 billion in fees consumers pay yearly for often-outdated hardware. But unlike companies like Google and TiVO, Roku isn't supporting the plan, making it clear this week the company doesn't want to upset its friends in the cable industry:

"We have not been advocating for a rule making in this area at this time,” Tricia Mifsud, a Roku spokeswoman, told IBD. “While we are known for selling streaming players, it is only one area of our business. Customers also access our platform through smart TVs and streaming players that operators deploy."

Roku's been partnering with Charter and Time Warner Cable (soon to be merged) on small-scale trials that involve the cable companies giving away a free Roku alongside a skinny bundle of basic channels. In New York City, for example, Time Warner Cable's trial offers the free Roku as a replacement for the cable box, delivering three different skinny promo bundles ranging from $10 to $50. Roku makes it pretty clear it's keeping its mouth shut in the fight over the cable box because it believes these relationships will only flourish:

"In addition to Time Warner Cable, we also have a similar arrangement with Charter where they are buying streaming players to offer in a bundle,” added Roku’s Mifsud. “Overseas, we have partnerships with Sky in several countries and Telstra where we have licensed use of our platform and they have deployed their streaming video services to co-branded streaming players."

Indeed, Roku's already cooking up a hybrid streaming and cable box for use overseas it hopes the soon-to-be fused Time Warner Cable Charter will adopt as well. The problem is that these trials aren't likely to see broader deployment in the States, because execs fear such alternatives will cannibalize their already-struggling traditional cable subscriber bases. Cable operators have a long, proud history of flirting with more innovative, less expensive alternatives only for executives to scrap or hamstring the ideas for fear they might hurt the sacred, legacy TV cash cow.

But, because Roku believes it's first in line for the cable industry's affections, it appears to be backing away from an initiative that would likely be good for the entire sector (investment by Viacom, 21st Century Fox, and UK cable operator Sky might be shaping Roku's thinking as well). After all, why support broader, healthy competition when you believe you've got the inside track? Well, because should the FCC's gambit actually work, Roku (which people forget began as a brain child of Netflix) stands to gain a much larger chunk of this suddenly-open market than it will from remaining mute.

from the hey-we're-innovatin'-over-here dept

Last week, we noted that the FCC has proposed new guidelines that would bring some much-needed competition to the cable TV set top box market. Data shows that 99% of consumers pay something on average to $230 a year in set top box rental fees, despite much of this dated hardware being worth little to nothing. Collectively, the cable industry pulls in around $20 billion annually in set top box rental fees, which are fairly consistently increased once or twice a year. Unsurprisingly, whenever the FCC has tried to do something about this proprietary, captive market, the industry becomes downright hysterical.

That was exemplified last week when the FCC simply proposed requiring cable operators deliver programming data to third-party hardware using any accepted standard they choose. Cable operators can still provide the traditional set top box (and consumers can still rent them), the industry would simply suddenly face competition for what's been captive income. But with $20 billion in annual revenues at risk, the industry quickly got to work trying to argue that the FCC's plan would demolish the very fabric or time/space and result in no limit of untold harm to consumers.

Despite the reality that most cable boxes (and many executives) are outdated relics of a dying era, the cable industry stuck to one central theme last week: the FCC's plan is "big tech's" attempt to thwart all of the amazing innovation occurring in the cable industry. A "diverse" group of cable companies and broadcasters calling itself the "Future of TV" coalition quickly launched to deride the FCC's "attack on innovation," with one press release circulated by the group going so far as to suggest that Google has been holding secret meetings at the FCC that undermine the cable industry's relentless thirst for...diversity:

"...Secrecy and subterfuge shouldn’t be tolerated and professional staffers who know the ropes and are unlikely to be swayed by a flashy demo and a Golden Ticket. The AllVid scheme being flogged by Google and the FCC is unfair and destructive to values held far too dearly on Capitol Hill – undermining free market competition and putting a government thumb on the scale for powerful incumbents like Google, and making it harder for those serving communities of color and providing diverse and independent programming to make the video ecosystem work.

There's no secret cabal in the fact that Google, Apple, Roku, TiVo and countless other companies have lobbied for years for an open cable set top box market. But the cable industry has lobbied ferociously to dismantle any attempt to bring this goal to fruition (including CableCARD). So to mock Google for "secretly" lobbying for broader competition is both strange and hilarious. The argument that more robust set top box competition will somehow hurt diversity is equally absurd (more choice and lower product cost is good for diversity), yet it seems to pop up all over the Internet in mysteriously placed editorials.

But credit the cable industry for one thing, it knows how to rally around a central message, even if that message is absolute bullshit.
The central theme of this blog post by the industry's biggest lobbying organization (the NCTA) was cable's amazing knack for innovation:

"We see these innovations almost daily, which is why it’s so strange that government feels compelled to insert itself in the mix in order to do Big Tech’s bidding. By forcing new government mandates on network providers and content creators, the FCC may intend to reward Google handsomely, but in the process it will ignore contractual freedoms, weaken content diversity and security, undermine important consumer protections like privacy, and stall the creative and technical innovation that is driving positive changes in today’s TV marketplace.

Likewise, a blog post by Comcast largely involves the company patting itself on the back for being incredibly, awesomely innovative:

"Comcast is responding with our innovative X1 platform, and enabling access on a growing array of devices. Like other traditional TV distributors, online video distributors, networks, and sports leagues, Comcast is using apps to deliver its Xfinity service to popular customer-owned retail devices. These apps are wildly popular with consumers. Comcast customers alone have downloaded our apps more than 20 million times. This apps revolution is rapidly proliferating, and we are working with others in the industry and standards-setting bodies to expand apps to reach even more devices.

Given these exciting, pro-consumer marketplace developments, it is perplexing that the FCC is now considering a proposal that would impose new government technology mandates on satellite and cable TV providers with the purported goal of promoting device options for consumers.

Oooh, step back FCC, Comcast is developing apps! The problem is, and the insular cable industry forgets this constantly, that absolutely nobody likes or believes the cable industry outside of the cable industry. Cable providers continue to have the worst customer satisfaction and support ratings of any U.S. industry or government agency (no small feat). So when "big cable" breathlessly insists it's just trying to protect its monopoly over cable set top hardware to the benefit of minorities and puppies, it's unclear who the hell would be daft enough to actually take them seriously.

Here's the thing: if the cable industry's existing set top box systems are as "innovative" as the industry claims, surely competition will bear that out? When faced with a myriad of new hardware options, customers will clearly want to continue paying Comcast a significant amount of money for a traditional cable box, right? If the cable industry is half as adaptive as it claimed last week, surely this sudden influx of competition will be like a gnat at the ear of a god of innovation. Unless of course this prattling on about innovation is just the insecure braying of an industry absolutely terrified by the foreign specter of real competition?

from the killing-sacred-cash-cows dept

The FCC has formally declared war on the outdated, over-priced traditional cable box. The agency has put forth a new proposal (pdf) for guidelines intended to bring much-needed competition to the cable set top box market. As recently noted, data collected from the top ten biggest cable companies found that 99% of cable customers still rent a cable box, paying $231 in fees annually for often-outdated hardware that's frequently worth very little. This cozy little captive market nets the cable industry roughly $20 billion in rental fees every year.

"Decades ago, if you wanted to have a landline in your home, you had to lease your phone from Ma Bell. There was little choice in telephones, and prices were high. The FCC unlocked competition and empowered consumers with a simple but powerful rule: Consumers could connect the telephones and modems of their choice to the telephone network. Competition and game-changing innovation followed, from lower-priced phones to answering machines to technology that is the foundation of the Internet."

The FCC wants to design a software-based solution that lets consumers access cable content via the hardware of their choice. Hardware that, thanks to competition, would be better, cheaper and faster than the clunky old cable boxes we all know and love. The FCC's careful to state it's not mandating a specific standard by which cable operators have to provide programming data to these devices, stating they simply need to adhere to "any published, transparent format that conforms to specifications set by an independent, open standards body."

This isn't the FCC's first attempt to force competition on the set top box market. CableCARD was the agency's earlier, ineffective attempt to mandate a standardized card for use in third-party set tops. CableCARD regulations were well-intentioned but cumbersome, and frequently left unenforced. The cable industry also went out of its way to avoid pitching the cards to consumers, and often made the installation process as cumbersome and nightmarish as possible. When meager CableCARD stats were released annually, the cable industry would then collectively shrug and insist low adoption reflected a genuine lack of interest in the idea of better third-party devices.

With $20 billion in set top box revenues on the line, the cable industry has spent the better part of a decade fighting tooth and nail to kill this FCC proposal and anything like it. Opponents including AT&T, the MPAA, and the cable industry's biggest lobbying organization today formed what they're calling the "Future of TV Coalition," which argued in a release that greater set top box competition will kill diversity programming, hurt consumer privacy, embolden pirates, and generally just destroy the known universe:

"Many parties, including 30 members of the Congressional Black Caucus, have warned this would unravel the modern TV ecosystem, doing particular damage to small, independent, and diverse programmers and the communities they serve. AllVid would also undermine vital privacy and other consumer protections that apply to pay-TV providers but not the tech firms advocating adoption of AllVid. And it would erode protections against video piracy, rendering programming less secure."

Of course that's bullshit, and what the industry's really afraid of is seeing a cornerstone of its uncompetitive walled-garden empire demolished by real competition. Granted it's worth noting that the FCC's proposal doesn't prevent customers from keeping their existing cable boxes, nor does it stop cable providers from providing them. In other words, if the cable industry wants to retain customers on its systems, all it has to do is innovate and compete.

All of that said, you can't begrudge those who look at the CableCARD fracas of the last decade and legitimately wonder whether the FCC has the chops to actually implement and enforce such guidelines with an election (and potential FCC shuffle) looming. It's also worth asking if another multi-year enforcement fight is worth it with the cable industry on a collision course with Internet video and irrelevance anyway. Whatever happens, it's at the very least amusing to see a former cable lobbyist nobody expected much from plunge a dagger into one of the cable industry's largest and most sacred cash cows.